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In a report on the 2007-2009 liquidity and credit crunch, there are several concepts that describe various factors of the credit crisis. Which of the following statements accurately defines these concepts?
A
A liquidity backstop is a temporary halt in funding liquidity to structured investment vehicles (SIVs) in order to minimize credit losses.
B
A narrowing of the bid-ask spread results in an increase in market liquidity.
C
Because of the forced sale of assets due to declining asset values, a loss spiral generates a lower new position value than a margin spiral.
D
The credit protection buyer in a credit default swap (CDS) receives cash flows from the portfolio that underlies the CDS.
